To quote from a report published by the United Nations, India is at a critical juncture in terms of protection of the right to adequate housing, which is currently at a tipping point…

India’s real estate industry is certainly facing challenging times… Residential new builds in urban India have been on a downward trajectory since the highs last seen in 2012-13. Sales have plummeted, and there’s plenty of unsold inventory. There was demonetisation in November of last year, and then the goods and services tax (GST) in July this year.

Given the environment, we conducted a survey of dealers – of tiles, sanitary ware and bathroom fittings – in India to gauge their sentiment about the future of the building product sector. Contrary to our expectations, dealers were bullish.

Urban India has a housing shortage – pegged at 18.78 million, and projected to be north of 40 million by 2022. There is a huge unmet demand, especially for affordable and low-cost housing. The government announced a series of initiatives to spur growth in the segment, such as subsidies, the Swachh Bharat initiative, and the ‘Housing for All by 2022’ scheme.

Do have a look at our case study where we helped a Spanish manufacturer of roof tiles explore opportunities in India.

As always, we hope you enjoy reading our newsletter, and we look forward to your comments.

Best regards.

Sentiment analysis of dealers of building products in India

by Rathin Shah

The housing shortage in urban India stood at 18.78 million households in 2012. Yet, residential new builds have been on a downward trajectory since the highs last seen in 2012-13. ValueNotes conducted a dipstick survey of dealers in India – of tiles, sanitary ware and bathroom fittings – to gauge their sentiment about the future of the building product sector.

India is urbanising at a rapid rate. Currently home to ~400 million urban dwellers, an additional 300 million will be added by 2050. While urban housing shortage is projected to be north of 40 million by 2022, real estate developers have plenty of unsold inventory. This demand-supply gap is primarily due to the gigantic shortage of affordable housing.

Newspaper headlines always play up the trend of rising house prices. Rapid rises are deemed as positive news (ostensibly signalling robust demand), while declines are negative. The real problem is that rapidly rising prices make housing unaffordable for those who don’t have it (or enough of it).